As markets tighten and market competition
increases, it becomes increasingly difficult for companies to achieve
product differentiation in their market place. As such, businesses will
find it harder and harder to optimise their profits unless they develop
effective strategies to achieve differentiation. One way to accomplish
this is through the enhancement of customer intimacy.
Account Planning, Management & Development is the process that
organisations adopt in order to prioritise their customers in terms of
value to the business. In most businesses, the 80/20 rule applies where
80% of current and/or potential revenue comes from 20% of the customer
base. However, in recognising the value that these 20% of customers
hold, it is important to adopt a strategy that is going to ensure that
they are handled in such a way that maximum effort is focused on the
activities that will yield the greatest potential for the company in a
Successful Account Planning, Management & Development ensures
that a company recognises the importance of certain customer
relationships to the future of their organisation and treats these
relationships as an asset to the company.
The process used to categorise customers in terms of potential as
well as the process adopted to manage and develop these customers
effectively are paramount to the success of any Account Planning,
Management and Development strategy.
So what is a Key Account?
Essentially, it is a customer who can help to shape your company’s
future. This may not necessarily be your largest customer nor the
highest spending customer. In this way, the top 20 revenue,
one-size-fits-all approach can be costly and risky.
Once you have completed your customer research, a number of factors
should be assessed when deliberating your Account Planning, Management
and Development strategy:
- Current revenue profitability vs. potential revenue profitability
- Complexity of needs
- The industry in which they operate and its viability
- Financial stability
Although the process of developing and managing Key Accounts more
intimately yields greater customer penetration or share of wallet, the
costs of maintaining an intimate relationship with clients can also be
costly. It is for this reason that the ‘biggest’ clients do not always
make the ‘best’ clients. It is a common mistake for organisations to
simply segment their customer base into key accounts based on their
revenue contribution, consider:
- Larger companies often require more attention and expect not to pay for it
- Larger companies tend to exert their power and negotiate lower
prices, often exploiting suppliers by creating price wars (thus
- Larger companies employ the resources of smaller suppliers, only
giving them small orders but getting the lowest prices so they can
squeeze on their larger suppliers (again, affecting profitability)
It is often a hard lesson for salespeople to learn that many big
companies rarely provide the return on investment proportionate to the
amount of effort that’s required. In addition, these customers often
compromise the company’s profitability significantly.
Analyse your accounts
So you need to analyse your accounts carefully. When analysing an
account, your core focus is to interpret the customer data in such a
way that will provide you with an understanding of how you can yield
maximum potential from the client.
There are five key areas that need to be researched:
This is the big picture information it explains why they are in
business and where they are headed as an organisation. This information
is critical to your basic understanding of the company.
The nuts and bolts of the organisation, the what, the when and the where.
This information is critical in assessing the ongoing viability of the customer.
Recognise their strengths and minimise them. Recognise their weaknesses
and exploit them. Understand what they are doing and know how to combat
Your Company History
Have a basic understanding of previous dealings with the customer but
also know where to find more detailed records if or when required.
I hope this helps you plan and use your selling energy wisely.